The Ministry of Economy reported on the resilience of the economic system
2 July 2024 10:15
Ukraine’s economy continues to show signs of recovery despite the difficult conditions of the war. This is stated in the Monitoring of the main events in the Ukrainian economy in May by the Ministry of Economy, reports "Komersant Ukrainian"
Thus, according to the Ministry of Economy, GDP growth in January-May 2024 was 4.7% [±1%] (1.6% in the same period in 2023). This result was achieved despite the intensification of negative factors in May, such as the intensity of hostilities and shelling of infrastructure facilities.
The business demonstrated high adaptability to the challenging environment. The key factors behind the stability were the stable operation of the sea corridor, which contributed to high exports, and strong demand for construction services, supported by budget funding for infrastructure restoration. However, a shortage of skilled workers and uncertainty over the terms of mobilisation continue to pose challenges for businesses.
The state budget in May 2024 showed an increase in revenues by 0.6% compared to May 2023, reaching UAH 229.1 billion, excluding international financial assistance. Expenditures increased by 7% to UAH 390.4 billion. The state budget deficit amounted to UAH 161.1 billion, which is 70.3% of total revenues. In the first five months of 2024, the total budget deficit reached UAH 466.9 billion or USD 11.8 billion.
The foreign exchange market saw an increase in demand for foreign currency, which led to an increase in the NBU’s interventions. In May, the NBU’s net sales of foreign currency amounted to USD 3.1 billion, the highest figure since the beginning of the year. International reserves declined by 7.9% to USD 39 billion, but this is sufficient to cover imports for 5.1 months.
The inflationary situation remained stable. In May, consumer inflation was 0.6%(the highest since the beginning of the year), and the annual rate was 3.3%, which is below the NBU’s target range. The slight acceleration in inflation was driven mainly by non-monetary factors, including seasonality in the food market and a preliminary rise in global energy prices.
The main anti-inflationary factors remain depressed demand due to significant migration, the stability of utility tariffs (sic! – so says the Ministry of Economy) and tight monetary conditions. Despite the challenges, Ukraine’s economy is showing signs of recovery, which demonstrates its resilience in the face of a prolonged war.
